Two Startup Trends in 2012: Less Social, More Physical

By Alexis C. Madrigal

Last year, when Sarah and I toured the south looking for new tech companies, the tech world was actually quite a different place. Most notably, neither Facebook nor Groupon had debuted on public markets. Businesses built around social media or social networks still had that frisson attached to them, like they were riding The Next Big Thing wave. Everything was social this, social that, and social the other thing.

Fast forward just twelve months to this year's trip to the Great Lakes and things look different. Groupon had a successful IPO, but it's stock has declined 80 percent since then. Facebook's stock has headed in a similar direction losing more than 40 percent of its value. It's not that social media companies don't have value, but the scale has been reset by the changes at its top.

Perhaps it's a bit more complex than that, actually. Social is now just an assumed function of most software companies. Like, of course your fitness app or your new CRM software is social. Why wouldn't it be? Social has become (as it probably should be) a means to an end. Count that as trend one.

One end we're seeing is education of all types. We've already seen a bunch of startups around the general concept of skill sharing and learning in both traditional classrooms and outside of them (The Starter League or Dabble). We're also seeing food as a major area for innovation across the board: for amateurs and professionals, the cooking (CookItForUs) and the eating, the farming (FarmLogs) and the serving (FoodGenius). Then there's the sharing economy as we see in OhSoWe.com out of Chicago. And lastly, there are a lot of businesses attempting to do financialish things (Dynamics, say).

The other trend we're seeing is more companies that connect the digital and physical in new ways. This may be a natural consequence of the number of mobile startups, but I think it's also due, in part, to the realization that it's easier to get people to part with their money in the "real world" than it is online.

Of course, at this point, these are more intuitions drawn from looking at long lists of venture capital firms' portfolio companies, but I think we'll find more evidence that these trends are real as we get onto the ground from Chicago to Pittsburgh. (And if you're an entrepreneur or investor in that region who agrees or disagrees with these sentiments, send me an email: alexis.madrigal[at]gmail.com.)